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Judicial Deference to Mutual Fund Boards: Lessons from Post-Jones Excessive Fee Litigation  (Volume 53, Number 22–December 30, 2020)


Author:  Sean M. Murphy.; Robert J. Liubicic.; Ayana Sumiyasu.


Source: Volume 53, Number 22, December 15 2020 , pp.267-276(10)




Review of Securities & Commodities Regulation

Abstract: 

Following on the Supreme Court’s Jones decision, the plaintiffs’ bar filed a large wave of actions claiming that mutual funds paid excessive fees to their advisers. The authors analyze this litigation. They focus first on plaintiffs’ challenges to the independence and qualifications of independent directors. They then turn to plaintiffs’ claims that board processes for reviewing and approving fees were deficient. Although all of plaintiffs’ claims have been rejected by the courts, the authors conclude that new fee litigation is “almost certain” and that recent decisions provide valuable insights into current best practices for fund directors.

Keywords: Jones v. Harris Associates L.P.; Section 36(b) Litigation; Director Independence; 15(c) Reviews

Affiliations:  1: Milbank LLP; 2: Milbank LLP; 3: Milbank LLP.

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